After several months of elevated confidence, September saw a return to levels seen during the first part of 2025. The latest Lloyds Business Barometer saw a reduction of 12 points in September 2025, with confidence remaining above the long-term average of “29%, close to the average seen across 2024 (44%) and above the average in 2023 (33%).”
According to the update from Lloyds Bank, economic optimism edged down for the second time since April, with a fall of “11 points to 33%, but remains above the long-term average of 19%.”
The fall in business confidence included a “12-point fall in trading prospects to 51%. ”
The figures that make up business confidence, such as economic optimism and trading prospects, are arrived at by “calculating the difference between the percentage who responded positively and the percentage who responded negatively.”
Wage growth expectations eased to a 5-month low, with “32% (down six points) of businesses forecasting average pay increases of 3% or more.”
Firms expecting to increase wages by “4% fell six points to 17%, although these levels are still above pre-pandemic norms, suggesting some underlying buoyancy.”
Hiring intentions for the next year declined for the first time in four months despite the majority of companies saying that they are now expecting to take on more staff.
Over half, (55% down from 62%) of businesses surveyed expect “to hire more staff in the coming year, with 17% anticipating reducing employee numbers, decreasing the net balance by 12 points to 38%.”
In September, the net balance of companies expecting to raise prices over the next year was “down two points to 63%.”
Of firms surveyed, “65% (down two points) said they would raise prices in the coming year, while those anticipating price reductions remained unchanged at 2%. As with wages, pricing expectations remain significantly above pre-pandemic levels.”
Although increased market volatility earlier in the month may have impacted confidence, levels of trading prospects and economic optimism “remain above their long-term averages.”
Businesses may find some reassurance that the Bank of England is expected to reduce interest rates again in the next 6 months, meanwhile long-term global bond yields have calmed which, “if sustained, may have a positive impact on businesses as we move into the last few months of the year.”
Firms across manufacturing, construction, retail and services all saw confidence decline in September.
The biggest change was in manufacturing with “a decline of 31 points to 31%, a two-year low.” Retail sentiment fell “17 points to 40%, its lowest level in four months.”
Similarly, confidence in the service sector fell “six points to 47%, the lowest reading since April.”
Construction continued to decline for the “fourth consecutive month, dropping 5 points to 35%.”
Most of the UK’s twelve regions and nations experienced a considerable decline in confidence this past month.
According to the update from Lloyds Bank, some of the exceptions include the North East, South East and Northern Ireland, where confidence has actually surged 13%, 3% and 2% points respectively.
Although business confidence returned to levels seen earlier in 2025, a range of metrics are still said to be above the long-term average. And UK businesses still have opportunities ahead, whether that involves upskilling their professionals workforce, enhancing their existing products or exploring potentially new markets.